SINGAPORE (May 21): In the wake of much publicised negative turn in oil prices, Maybank Kim Eng (MBKE) analysts predict a recovery in oil prices and oil-related stocks. Oil-producing nations have begun cutting production to adapt to severe oversupply while the lifting of lockdown measures will help increase demand going forward. 

After entering negative territory in late April, oil prices have begun to correct upwards, with the Brent Crude oil index rising 18% to US$35.75 ($50.60) per barrel while the West Texas Index increased 27% to US$33.49. Agreed production cuts from OPEC+ have begun to take effect  while demand for oil has increased in preparation for a post-lockdown economic jumpstart as US biotech firm Moderna announced promising early results for their vaccine tests. A weaker US Dollar and better performance on Wall Street have also contributed to oil price recovery. 

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